Filing U S Tax Return Online: Foreign Exemption And A C A

steveinbsas

Registered
For those US citizens who have not yet filed their 2014 tax return there is an "easy" way to do so online and claim the foreign earned income exemption as well as the exemption for the non-compliance "tax" for failure to have ACA approved health insurance.

I have been using Tax Act Online for about five years. It is very easy to follow the steps and I've never had any problems with the returns I've filed. In fact, this year their program has prevented me from not including a 1099 that I didn't know about. Because I've used the same company in the past, my previous year's return is always avialble to import and I do not have to reenter the data for financial institutions which continue to send information (forms) to the IRS that I must report.

This the first year the tax (aka penalty) for not having approved health insurance kicks in unless you live outside of the USA for at least 330 days of the year. If you didn't have an approved policy, the tax will automatically be added to the total amount of tax you owe when you answer NO in the Federal Q & A, but will later be subtracted if you answer YES to the question about residing outside of the USA for more than 330 days of the year.

The program also asks is you would like to claim the foreign earned income tax exemption.

Before signing and submitting the return, there is an option to review it with a series of "alerts" which check with the information already received by the IRS. There was an alert for a 1099 that I never received. It was from a US financial institution and the amount was actually ZERO, but I backtracked and added it to my return (even though the 1099 should not have been sent in the first place). All of the information for the financial institution (address, federal tax ID, etc.) was already in the Tax Act system so I didn't have to go through my files to access and enter the info.

After electronically signing and submitting the return to the IRS, the program took less than a minute to display a notification that the return had been accepted by the IRS. I take this to mean that all if the numbers in my return matched all of the numbers that IRS had in their system. I believe I would have received a notification if that was not the case, but this has never happened.


PS: I use the "deluxe" Tax Act Online program. I believe it is also possible to file a federal return free of charge with this company, but I likes several of the "extra" features of the deluxe program. I did not "buy" any of the other services (defense in case of an audit, etc).
 

steveinbsas

Registered
Thanks Fred, but there's a verb (or two) missing in you post. If the official date to file is June 15 for U.S. citizens living outside the U.S. is that also the official date to pay any tax due?

If the taxpayer did not make the appropriate estimated tax payments during the tax year, penalties and interest may apply, even if the return is filed "on time" (June 15).

U.S. citizens (and permanent residents) living outside the U.S. can also file for a four month extension at any time prior to June 15th, making the final date for filing October 15 (the same deadline anyone in the US faces if they file for a six month extension before April 15th).

I have always filed my return or asked for an extension before April 15, knowing if I don't do it then that I am likely to forget about it in June when no one is talking about "tax day" on The Today Show. Tax Act On Line automatically sends email reminders before the extension expires in October.
 

allcraz

Registered
Hi Steve. I'm currently filing with TaxAct. One question. You wrote: "[background=rgb(252, 252, 252)]The program also asks is you would like to claim the foreign earned income [/background][background=yellow]tax[/background][background=rgb(252, 252, 252)] exemption." Is this only with the Deluxe edition? I didn't see that option in the free edition. Thanks so much.[/background]
 

steveinbsas

Registered
Hi Steve. I'm currently filing with TaxAct. One question. You wrote: "[background=rgb(252, 252, 252)]The program also asks is you would like to claim the foreign earned income [/background][background=yellow]tax[/background][background=rgb(252, 252, 252)] exemption." Is this only with the Deluxe edition? I didn't see that option in the free edition. Thanks so much.[/background]

Since I didn't use the free edition I'm not sure. The question about foreign income was one of many in the "Federal Q & A" section. I did not click on anything that was related to foreign income for it to appear. Are you using an address in Argentina as your official tax residence on your return?

I'm not a tax expert, but if you are claiming the exemption I think its imperative to indicate a foreign address on your return. If you already answered the federal Q & A and didn't see the option for the foreign earned income tax exemption, I suggest you repeat that section, just in case you missed it the first time.

One thing that I found very interesting: The program asked if I had approved health care coverage in 2014 and, as a result of my answer (NO), the ACA "tax" (aka penalty) was automatically added to the total tax that I owed. Near the end of the Q & A, when I was asked if I lived outside of the USA for 330 days of the year and answered YES, the "tax" instantly was deducted from the total amount that I owed.
 

allcraz

Registered
Thanks so much, Steve. I had to search for the Foreign Income Exclusion to find it in the program. Am going back through it now. Yes, I put my Argentine address, etc. etc. And yes, the last part you talk about with the health care coverage was fine like you said. Thanks again, I appreciate it.
 

jantango

Registered
Democrats Abroad International held a conference call today at noon with Senator Bernie Sanders to ask him questions relating to issues that concern those living abroad.

There are many countries that do not tax their citizens living in other countries, while many US citizens living abroad pay taxes in their country of residence and in the USA. Senator Sanders is committed to a residence-based plan that eliminates the requirement for expats to file annually with the IRS.
 

MatameBA

Registered
This would be amazing, but I just don't see ANY administration making this a priority.

Plus, Bernie wants to massively increase tax revenue... so he's no longer going to tax expats? I'll believe it when I see it.
 
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